Apartment REITs benefitting from the hot market
Apartment REITs continue to enjoy positive gains and continue to look bright. Manhattan apartment rents jumped 9.5 percent in the fourth quarter as landlords emboldened by increasing demand cut concessions and pushed price increases in what’s traditionally the slowest leasing season. *1 One of the key factors driving the tightening market, Reis said, was a lack of supply. Some 37,678 new apartment units came to market in 2011, the firm said, the lowest total in 31 years of data and nearly 25 percent less than the prior low. *2 The plummeting vacancy, rising rents and increased demand has led to successful REITs in the apartment sector.
“Investors continue to view apartments as a preferred asset class in today’s environment and long-term demographic changes favor rental housing,” said Mark Obrinsky, Chief Economist of the National Multi Housing Council in Washington, DC. *3
Indicative of the success of apartment sector investment is URI Inc.. “The truth is that we’re over 96% occupied,” Thomas Toomey, President and CEO of UDR Inc., which owns stakes in 62,000 apartments. “We don’t have a problem finding customers. This is now a time when we’re just going to end up increasing rents.” *4 Unless there is an apartment building boom in the near future to accommodate growing demand, REITs will continue to see high demand and have the luxury of rent increases.